This summer, HM Treasury is intending to implement the doubled Prospectus Directive limit, which will give small and medium-sized enterprises (SMEs) the opportunity to access funding of up to €5 million ahead of the European commission deadline of 1 July 2012. In preparation, Sharemark, the simple, flexible, low cost stock market for smaller companies, has announced the launch of a substantial initiative aimed at helping these businesses secure the funding they need to help them develop.
The innovative, new, fully-integrated, solution will provide SMEs looking to raise between €500,000 and €5 million access to a fundraising channel through which they will be able to gain capital from the retail investor community. Sharemark, working with the retail client functionality provided by The Share Centre, will co-ordinate the entire fundraising package, from due diligence to the completion of the fundraising process.
In order to provide SMEs who sign up with the most comprehensive package to meet their fundraising needs, Sharemark has enlisted the support of some of the leading experts in the country. Lesmoir-Gordon, Boyle & Co Ltd will provide corporate finance expertise; while legal expertise will be provided by Squire Sanders Hammonds. SMEs will also receive access to up to £10m bank debt through Clydesdale Bank under the same due diligence process.
Sharemark will provide the marketplace where investors can find company presentations and offer documents, while investing will take place through The Share Centre and a number of other third party brokers.
Sophie Douglas, manager of Sharemark said: "We’re very pleased to be in a position where the services we provide can be used to create a cost effective solution for small business fundraising. The Government has been calling for SMEs to be the driving force behind an economic recovery and we believe this fundraising initiative will aid and equip many of them with the necessary funds to kick-start their future growth, and therefore help create new employment opportunities."
Gavin Oldham, Chief Executive of The Share Centre, said: "This venture from Sharemark offers a timely solution for SMEs whose growth has been held back through the restricted lending opportunities available. It also provides retail investors, who have generally been denied access to new issues over recent years, with an excellent chance to share in this success by being able to invest in the companies, free of both dealing commission and stamp duty. Our due diligence test, which has stringent criteria to find UK registered smaller companies across all industry sectors which have been trading for three+ years, means that investors will be offered quality businesses with sound management and clear aims and objectives at good value prices."
Sharemark’s primary fundraising service will also be extremely competitive compared to market alternatives. Following a pre-admission screening (charged at £2,450 + VAT to ensure that an applicant company is ready for the service, companies will enter a due diligence process which will result in an Admission Document. Companies that successfully attract their minimum threshold of money to be raised will then be charged a £99,000* admission fee with an additional five per cent commission charge deducted from the total funds raised prior to transferring the balance of cash to the fund-raising company. Thus a company raising £2m will face a total cost of just over £200,000: less than one-third of the cost of similar equity fundraising on AIM.
Sharemark offers a good alternative to companies wishing to avoid an expensive flotation. Owned and operated by The Share Centre, it is an order driven stock market with a visible online trading mechanism available at www.sharemark.com. Formed in 2000 by Share plc as a junior stock market in its shares, it was opened up as a solution for other smaller companies with large shareholder bases in 2002. Currently, 22 stocks are traded across open-ended, closed-ended and monitored markets. Shares are traded in a transparent online auction, where the price is fully determined by supply and demand, monitoring the limit prices at which buyers and sellers are prepared to deal.